Deutsche Bank economists see European currencies as the main beneficiaries of a context in which the coronavirus is being overcome, with the highest growth in the world and an improvement after having grown behind. They estimate that the EUR / USD will break 1.25 in September.
Key statements:
Despite the large rise in US yields, the trade-weighted dollar is at the lower end of a range that has prevailed since 2015. The divergence speaks of extreme macroeconomic imbalances: booming consumption but lagged job creation. As a result, the Fed is likely to be the last G10 central bank to cut purchasing programs this year as the US current account deficit continues to deteriorate. “
“The European prospects look favorable. We expect a considerable rebound in the EU-US PMI spread. in the next few months. These turning points have historically seen EUR / USD rallies. The euro has shown significant positive non-linearities in the interest rate differential when bond yields turn positive and if the ECB gets ahead of the Fed, this should further help the euro. ”
“EThe trade-weighted dollar is at a great technical level – the lower end of a range that has prevailed since 2015. The risks are skewed towards a break to the downside. We see that the EUR / USD pair will hit 1.25 during the summer months. “
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